Correlation Between CBH and First Trust
Can any of the company-specific risk be diversified away by investing in both CBH and First Trust at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CBH and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CBH and First Trust Senior, you can compare the effects of market volatilities on CBH and First Trust and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CBH with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBH and First Trust.
Diversification Opportunities for CBH and First Trust
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CBH and First is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding CBH and First Trust Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Senior and CBH is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CBH are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Senior has no effect on the direction of CBH i.e., CBH and First Trust go up and down completely randomly.
Pair Corralation between CBH and First Trust
If you would invest 1,035 in First Trust Senior on November 2, 2024 and sell it today you would earn a total of 10.00 from holding First Trust Senior or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 5.26% |
| Values | Daily Returns |
CBH vs. First Trust Senior
Performance |
| Timeline |
| CBH |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust Senior |
CBH and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBH and First Trust
The main advantage of trading using opposite CBH and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBH position performs unexpectedly, First Trust can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Trust will offset losses from the drop in First Trust's long position.| CBH vs. Eaton Vance National | CBH vs. Blackrock Muniholdings Ny | CBH vs. Nuveen California Select | CBH vs. MFS Investment Grade |
| First Trust vs. Blackstone Gso Long | First Trust vs. Eaton Vance Senior | First Trust vs. Western Asset Global | First Trust vs. Western Asset Global |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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